Aleman-Castilla, Benjamin
(2007)
Informality and temporary migration in Mexico.
PhD thesis, London School of Economics and Political Science.
Abstract
This thesis studies two characteristics of the Mexican labour markets; informality and migration to the United States. Chapter 1 studies the impact of NAFTA on informality and wages, the former measured in a reduced form through the fraction of workers without any social or health coverage (unregistered workers). Using data on Mexican and U.S. import tariffs with the Mexican National Survey of Urban Labour (ENEU), I find that reductions in tariffs are related to reductions in unregistered labour. Unregistered labour decreases less in high import-penetration industries and more in export oriented ones. The Mexican tariffs are also negatively related to real wages, while the U.S. tariffs are negatively related to the registered-unregistered wage differentials. Chapter 2 is a joint work with Arturo Ramirez. It uses two Mexican tax reforms to test whether the unregistered sector is sensitive to changes in the tax burden. The first is the 1989 implementation of an asset tax, and the second is the 1999 elimination of accelerated depreciation allowances. The data comes from the ENEU, from which estimates of unregistration are derived; and the Annual Industrial Survey (EIA), from which the differential effects of the 1999 reform on each region and industry are implied. It is found that the response of unregistered labour to changes in taxes is heterogeneous, depending both on the economic sector and the nature of the tax policy. Lastly, chapter 3 studies the effect of temporary migration to the U.S. on labour market outcomes of Mexican workers. It uses panel data from the 1994-2002 ENEU, which is ideal for minimizing self-selection biases common to other sources. Fixed-effects estimation indicates that temporary migrants obtain higher earnings in the U.S. labour market during the period of migration. They also work longer hours and face a higher likelihood of non employment. Finally, the gains from migration are lower for more skilled workers and for those migrating from the most distant regions, relative to the U.S.
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